Three things that could impact rates this week

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Published Date 8/14/2023

Today's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.

Rates Currently Trending: Neutral

Mortgage rates are under pressure. The MBS market worsened by -57 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week: 1) Retail Sales, 2) Overseas News and 3) The Fed.

1) Retail Sales: We will get the July reading on Tuesday. Headline Retail Sales are expected to rise by 0.4% which is double the 0.2% pace in June. Same story for Retail Sales Ex Autos. However, we need to determine how much of the increase (if we get one) is due to higher prices and how much is due to stronger demand which are two separate things.

2) Overseas News: We get a log of heady economic data from outside the U.S. that can have an impact on the desire to own U.S. long bonds.

Eurozone: Employment, GDP, Industrial Production, CPI

China: Retail Sales, Industrial Production

Japan: GDP, Industrial Production

Great Britain: Unemployment, CPI, PPI, Retail Prices, Retail Sales

Canada: CPI

3) The Fed: On Wednesday we will get the Minutes from the last FOMC meeting where they increased their key interest rate and had a hawkish tone to their statement. The Minutes will give us a little more color to that decision. We also head into this weekend with the start of the Kansas City Fed's Jackson Hole, WY Economic Symposium which will feature a ton of speeches from Powell and crew.

This week's Potential Rate Volatility: High

This morning markets have started with a trend towards higher rates. Volatility has started high with plenty of potential for more this week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

All loans are subject to credit approval. Interest rates are subject to change daily and without notice. Current interest rates shown our indicative of market conditions and individual qualifications and will vary upon your lock-in period, occupancy, loan type, credit score, purpose and loan to value and lending source.